Mayor blasts raise plan for pension fund staff

BRADLEY OLSON, Copyright 2009 Houston Chronicle

Published
5:30 am CDT, Wednesday, August 26, 2009

Mayor Bill White, City Controller Annise Parker and various City Council members blasted a proposal to provide a 6 percent payroll increase to the staff of the city's $1.9 billion municipal pension fund, which incurred sharp investment losses last year amid the economic downturn.

An effort by White to block the measure with an eleventh-hour appointment to the pension's oversight board, which is expected to vote today on the increase as a part of its annual budget, failed after several council members said the attempt had been rushed and lacked transparency.

White used unusually strong language to underscore his opposition to the potential pay increase that could be in store for David Long, the pension's executive director, despite projected investment losses of 15.7 percent this year, an estimated decline of $355 million

“Do I think it's a good thing if somebody gets a pay raise while they have that kind of decline in their assets? Absolutely not. Period,” White said. “And I'll bet you this, if Mr. Long is getting a pay raise, there's not anybody else who would hire that guy. So how could you really say that it's justified by market conditions?”

Losses not as pronounced

The losses at the pension fund, which is overseen by an 11-member board that is partially elected by municipal employees and partially appointed by City Council, the mayor and the city controller, were less pronounced last year than the average losses at other big public investment funds.

The board is responsible for hiring the system's executive director.

Laura Tolley, a spokeswoman for the Houston Municipal Employees Pension System, said most of the system's employees are not directly involved in its investments. The investments are managed by private firms that are not receiving more money this year compared to last, she said.

The 6 percent increase includes health benefit costs and money for unfilled positions and does not mean that each of the system's 30 employees will get a 6 percent raise.

Merit pay increases that equate to 3 percent per employee have been incorporated into the budget, but not every employee is guaranteed to get a raise, Tolley said.

The board budgeted $3.52 million for salaries and health care costs in fiscal 2009 and spent $3.37 million, she said. This year, the proposed budget is $3.58 million, which recently was scaled back due to earlier concerns of board members.

Long, who frequently has quarrelled with White and several council members, got a 5 percent raise last year, making his current pay $240,125.

According to the city's audited financial statements, the municipal pension posted an $82.5 million decline in assets in fiscal 2008 compared to the year before.

A subcommittee of the pension board will decide if Long receives a pay increase or decrease, Tolley said, and the rest of the merit pay will be decided by the staff.

“At a time when the national economy is in a recession and Houston in particular has lost 80,000 jobs, all of which has a direct impact on our city revenues and our ability to provide services, our pension board should not be giving raises,” said City Councilwoman Anne Clutterbuck, who chairs council's Budget and Fiscal Affairs Committee.

Rare defeat for White

White's efforts to appoint a board member that could have opposed the pension budget were thwarted Wednesday in a rare defeat for the mayor, who sets the weekly council agenda and often avoids proposals that do not enjoy the consensus of the panel.

What remained unclear is why the board seat went unfilled from June until Wednesday, when it was proposed that council suspend its rules — going far outside established procedure for such appointments — to condense a three-week process to one week to make the appointment effective before today's pension board meeting.

White and other council members said the delay was caused by a lack of consensus on council about who should be appointed.

After debating the matter for more than an hour, council members Jarvis Johnson, Wanda Adams, James Rodriguez, Peter Brown and Green voted against changing the rules, which effectively made it impossible for the city to make the appointment before today's meeting.

“The transparency is not here on this one,” said Councilman Ron Green. “I just don't think that's the way we need to do business.”